Governor, lawmakers postpone negotiations over cap-and-trade funds

Reporting from Sacramento —  Gov. Jerry Brown and Democratic legislative leaders, currently in talks over next year’s budget, postponed negotiations over how to spend more than $1 billion raised by fees on polluters.

At issue is roughly 40% of the $2.2 billion in revenue expected to be raised by California’s cap-and-trade program, in which permits to pollute are traded and fees levied. Revenue has surged because cap and trade now applies to transportation fuels, the source of roughly 40% of the state’s carbon emissions.

The governor, Assembly Speaker Toni Atkins (D-San Diego) and Senate President Kevin de León (D-Los Angeles) agreed to detach those negotiations from the overall budget process. The Legislature is required to passed a budget by June 15.

“This will ensure that there’s ample time to put in place a thoughtful expenditure plan,” said H.D. Palmer, spokesman for Brown’s Department of Finance.

Palmer said the delay will not violate the constitutionally mandated June 15 budget deadline because the amount of cap-and-trade funding that will be appropriated will not change.

An annual framework on how the state will spend 60% of that money was approved by lawmakers last year. Each year, the $68-billion bullet train will receive 25% of the cap-and-trade funds, while 35% goes to affordable housing and other transportation programs.

Both Brown and state lawmakers have an abundance of ideas on how to spend the remainder, including proposals to help California deal with continuing drought, renewable energy projects and environmental restoration projects.

Twitter: @philwillon